Contract Types What Does Your Contract Mean?

They are also subject to their employer’s disciplinary and grievance procedures. Agency employees have full employment rights, but often have more obligations to the agency. For example, it’s harder for them to turn down work and they might have to work a minimum number of hours each week. The different ways you can be employed make a big difference to how you pay tax and National Insurance, how you can save for your retirement and your rights at work. It’s important you understand your legal employment status so you know the rights you’re entitled to.

A contract worker is an individual who is hired on a fixed-term contract in order to offer their services to your business or work as part of a project. They are typically paid an hourly or daily rate and usually work independently. A relatively recent development in the recruitment and job industry is that more and more employees are choosing to quit their positions in a company to work contract vs full time as a freelancer instead. As working from home and digital nomadism are on the rise, fixed-term contracts are becoming a more popular option for those who don’t want to be tied down to a specific employer. Contractors are in charge of handling their own taxes after every job they complete, as companies working with contractors do not have to calculate any deductions before payment.

Legal Rights

As part of your search, you might have a choice between contract, permanent and temporary work. A fixed-term contractor is usually hired when a new team member is needed seasonally or casually for a role. Contractors are also often brought in during a particularly busy period of work, or if there is a project taking place that needs specialist input.

We work with start-ups through to established businesses that have been running for years or looking to scale, futurecorns and unicorns as well as those ready to sell and often build their next business. It is important that the employment contract or agreement reflects the reality of the work situation. Our employment lawyers can do this by getting to know your company, your business and your staff. Employees are workers but the key difference is that they have extra employment rights that do not apply to workers who are not employees. Most are classified as workers, with some employment rights – such as the National Minimum Wage and paid holiday. Most working people in the UK are classed as employees and work under an employment contract.

Why is it important to understand your employees’ rights?

Another situation in which working with contractors is the preferred option is when a company is just starting out and may not yet have the budget and resources to hire multiple permanent employees. Outsourcing work to contractors whilst your business grows is a good way to keep on top of work, and you can always hire a contractor as a permanent member of staff once you have more financial stability. In most cases, this comes with benefits such as job security, health insurance, sick pay and holiday allowance. A fixed-term contract is offered to an employee on the basis that the contract will end at a future date.

This is crucial to keep all contractors and employees safe, and to ensure that work is completely safely and smoothly. Under the Health and Safety at Work Actand the Management of Health and Safety at Work Regulations, employers of workplaces must manage health and safety risks on their premises. They must provide them with health and safety information about their premises and coordinate with them to implement appropriate measures. Hiring contractors is ideal for occasional, short-term tasks, such as maintenance work on a building or equipment. It’s also useful for when you need a set amount of work carrying out and you won’t have more available once it’s complete, such as creating a new website.

Tax Guides

In some instances, fixed-term contracts may not include an exact timeframe, but will instead end when a specific task has been completed or fulfilled. Fixed-term contracts last for a specific amount of time, which has been set and agreed in advance. Also consider whether you’re currently in a position to invest in the time and resources needed to onboard a new member of staff.

• Fixed-term contract vs contractor are two terms that sound similar, but mean very different types of employment.
• An employee if you work for someone and do not have the risks of running a business.
• This issue has always been complex; although there are statutory definitions of ‘employee’ and ‘worker’, the law is essentially based around the court and tribunal cases and, as a result, is in a constant state of flux.
• One of the biggest benefits of hiring full-time employees is that they grow with the company.

This termination could be an end of a project or covering someone who is on maternity leave or sickness. Fixed-term employees have the benefit of having all the same rights as someone on a permanent contract. However, there are other factors, such as holiday entitlement will depend on the agreement. (You can also be offered permanent position after this contract ends.) So do read the contract and see what benefits and rights you may have before signing.